Banking Locally Reinforces the Value of Community

Below is our first guest blog post. It is by Don Blanchon, who is the Chief Executive Officer of Whitman-Walker Health and a member of our District of Columbia Advisory Board. I invite other members of the Washington area business community to submit their own guest blog posts for consideration. I would like this blog to be a center of conversation about our local economy and business environment. Please email blog post ideas to ronsblog@eaglebankcorp.com.

In the last few years, every individual, company and organization has been reminded of the significant role that banks play in our lives. We have come to rely on their financial products to sustain us. Yet not until the economy soured did we begin to appreciate that banking relationships, not products, are what matter most.

In 2008, the Whitman-Walker Clinic celebrated its 30th anniversary of service in caring for the Washington, DC gay, lesbian, bisexual, and transgender community and persons living with HIV. But that year also marked a major financial crossroads for the Clinic that had been years in the making. We faced long-term debt repayments in excess of $3 million. Our monthly operating revenues still did not cover our monthly costs. Then the rapidly deteriorating economy dealt the Clinic another major blow as private and corporate donations began to slow. Time was not on our side as we needed to raise $8 million by June 30th to pay off the debt and maintain mission-critical health programs that care for more than 8,000 local residents a year. We needed a major capital infusion in order to survive this storm.

Naturally, we turned to our existing banking relationship for immediate assistance. We had a longstanding relationship with one of the nation’s larger banks. We felt our balance sheet was strong enough—after all we owned a number of buildings and properties in the District—and our banking relationship was solid enough to justify a loan that could ease our temporary capital crunch. We were well-intentioned but clearly mistaken about the status of our banking relationship. The bank had a serious case of lender fatigue and would not even offer a loan proposal in light of now-tighter credit requirements. We quickly discovered that local community banks were far more responsive to our inquiries.

One of the main distinctions was that when we dealt with community banks, we were dealing with the bank’s senior leaders. These leaders had the authority to look beyond a rigid set of financial formulas and to think creatively about how to tailor a loan to our individual needs. These leaders also saw the value of forging a long-term relationship with us. These leaders balance their banks’ need for profitability with the community’s need for strong nonprofits like Whitman-Walker Clinic. These leaders understand that their banks have a broader, maybe even societal contribution margin in helping those organizations that help other community members in need.

We, eventually, forged a relationship with Bethesda-based EagleBank. As their Chairman Ron Paul said to me, they viewed our services as vital to the community and therefore wanted to work hard to make sure we continued our mission. Community bankers live in the communities they serve and so it is only natural that they would give special consideration to organizations like ours. While the Clinic’s Board of Directors ultimately decided to sell our headquarters building to solve our need for capital, we forged a new banking relationship with EagleBank and established a new line of credit that continues to help us sustain our services to this day.

The entire process also made me appreciate the value of keeping local deposits local. When businesses and organizations keep their deposits in local community banks, they are simultaneously investing in the local economy in the form of new loans. The same cannot be said for national banks. From a public policy perspective, we need to ensure a healthy and robust community banking system. Without it, organizations such as Whitman-Walker will be at the mercy of rigid formulas that have little regard for community impact and value.

Mr. Blanchon is the Chief Executive Officer of the Whitman-Walker Clinic and a member of EagleBank’s Washington D.C. Advisory Board.